The world of industrial production is changing – radically. Gone are the days of manufacturing stockpiles of goods in the hope that consumers will scoop them up. The intelligent factory of the future will make products to order, even for the smallest quantities, and can personalize them too, creating entirely new business opportunities. Sportswear maker Adidas is at the forefront of this new tailored, on-demand production.
New production technologies and networked machines now allow not only more cost-effective and efficient production; they also enable an unprecedented level of precision in manufacturing products to meet individual customer requirements. Such flexibility and customization are huge game changers and will give a competitive edge in the fiercely competitive manufacturing sector. Practically every major consulting company – from McKinsey to Deloitte – has issued a do-or-die report in recent years about how “mass personalization” is the wave of the future.
Proximity to customers through locate manufacturing close to sales
In the southern German city of Ansbach, Adidas operates an ultra high-tech production facility, called the “Speedfactory.” There, for the first time in decades, the company is making shoes again. The facility pairs a small human workforce with technologies such as 3-D printing, robots and computerized knitting to make running shoes – items typically mass-produced by workers in low-labor countries like China, Indonesia, and Vietnam. Almost all shoe components – the sole, padding and upper material – are produced in the Speedfactory. Around 160 workers monitor, maintain and support the highly-automated production systems.
Quick to manufacture and sell
Adidas meanwhile operates a Speedfactory in Atlanta, Georgia as well. The aim in Ansbach and Atlanta is to achieve a production capacity of around one million pairs of shoes per year. Each of these factories caters directly to its European and US domestic market respectively. The digital designs are tweaked ad infinitum, with robots seamlessly transmuting them into footwear customized to shifting preferences. By placing factories closer to consumers, Adidas is able to leapfrog shipping delays and expenses.
As its name suggests, Speedfactory is all about speed. Design, production and delivery times are super short. In the past, for example, the launch of a new Adidas shoe took nearly an entire year. A shoe using the new production method, by comparison, takes just 14 days. Another benefit: it’s possible to produce small batches of shoes targeted at a specific region with specific color or sole requests. Two examples are the “AM4LDN” shoes made for London and “AM4PAR” for Paris. Bringing new products to market at this speed was inconceivable just a few years ago. “Previously, we would wait until 50,000 or 100,000 pairs of shoes for a project had been produced and then take them to the market,” says James Carnes, Vice President of Global Brand Strategy at Adidas.
The goal: customized industrial products
The company’s goal for the future is to produce entirely customized shoes. Adidas CEO Kasper Rorsted envisions customers ordering shoes based on their individual preferences and receiving them within several days. The customization could go so far, in fact, that sensors incorporated in the shoes could serve as a feedback channel to determine areas under particular pressure that can be corrected in following versions.
Adidas is by no means the only sporting goods manufacturer to customize running shoes. Rivals like Nike and New Balance are also active in this area. And scores of companies in other sectors have also hopped on the made-to-order, customization bandwagon. In this new world, it will be hard for companies to justify delivery times of several weeks or months for a product that can be configured conveniently on a computer at the click of a mouse. If, in the past, distribution was built around manufacturing, in the future manufacturing is going to be built around distribution
Automation will create new jobs
How this highly digital production method will impact jobs remains to be seen. Some economists see it as the start of a larger trend. Improvements in automation, they argue, will substitute cheap foreign labor, pushing factories closer to where the consumers are and creating new jobs, some of which have yet to reveal themselves. Adidas boss Rorsted views his company’s digital transformation as an employment opportunity, not a threat.
Interroll: high-speed production on demand
Like Adidas, Interroll has its own “speed factories” with on-demand production. While most production facilities initially collect orders to ensure that the necessary resetting of the machine tool is worthwhile, Interroll has been implementing minimal set-up times at its production sites for years, allowing even the smallest order to be delivered quickly. For example, at the Global Center of Excellence in Wermelskirchen, the set-up times for rollers and RollerDrive are just 70 to 80 seconds, enabling delivery times within 24 hours in urgent cases. More than 8 million rollers in 60,000 different versions are produced there annually. Fifty percent of the orders involve production of even less than ten rollers.
The basis of the global production network is the Interroll production system (IPS). This group-wide concept, in use since 2006, combines the best-practice approach with the Japanese Kaizen principle to continuously improve the processes in all areas – not just in production.